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Recovery goal: Jobs with good wages

Robert Reich

TEXT OF COMMENTARY

Kai Ryssdal: The theme of the day tomorrow at the White House is going to be jobs, jobs, then more jobs. The president's hosting a big jobs summit. The goal is to figure out how to create more of them, and at the same time bring the unemployment rate back down into the single digits.

The president has invited members of Congress, CEOs from companies like Fed Ex, Google and Boeing. Not to mention a gaggle of economists and a certain former Secretary of Labor.

Commentator Robert Reich offers a sneak preview of what he'll say.


ROBERT REICH: Most ideas for creating more jobs assume that jobs will return when the economy recovers. So the immediate goal is to accelerate the process. A second stimulus might be helpful in this regard, if the nation could afford it.

Other, less expensive ideas include a new jobs tax credit for any firm creating net new jobs. Lending directed at small businesses, which are having a hard time getting credit but are responsible for most new jobs. A one-year payroll tax holiday on the first, say, $20,000 of income, which would quickly put money into people's pockets. Such a holiday would also make it cheaper for businesses to hire because they pay half the payroll tax. And maybe even a WPA-style program that hires jobless workers to insulate homes.

But there's reason to believe the basic assumption that jobs will eventually return when the economy recovers is wrong. Under the pressure of the Great Recession, many companies have found ways to cut their payrolls for good. They've discovered that new software and computer technologies have made workers in Asia and Latin America just about as productive as Americans, and that the Internet allows far more work to be efficiently outsourced abroad.

This means many Americans won't be rehired unless they're willing to settle for much lower wages and benefits. The official unemployment numbers hide the fact that a large number of Americans already have had to accept lower pay as a condition for keeping their jobs. Or have lost higher-paying jobs and are now in ones that pay less.

Yet reducing unemployment by cutting wages merely exchanges one problem for another. We get jobs back but have more people working for pay they consider inadequate, more working families at or near poverty, and widening inequality.

The goal isn't just more jobs; it's more jobs with good wages. Which means the fix isn't just temporary measures to accelerate a jobs recovery, but permanent new investments in the productivity of Americans.

RYSSDAL: Robert Reich teaches public policy at the University of California Berkeley.

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Judith, foreign worker programs in America are a national disgrace. It is even more disgraceful when considering the long history of these programs.

The last estimates for the scale of the foreign worker industry were in 2001, about $88 billion dollars per year at that time. The total is probably near to $150 billion today. It's big, serious money.

In the meantime many Americans have fought these programs tooth and nail. Our entreaties have gone unanswered. After ten years of struggle, the caps on the number of foreign workers have been raised, not lowered.

If it gets down to a bidding war for the loyalty of our politicians in Washington against the foreign worker lobbies, we will lose. We simply do not have the money to fight them dollar for dollar in the Washington influence game. They have far more money and power than we do. That much is clear.

One idea that is kicking around is the de-federalization of the worker visa process, that is, the Department of Labor must obtain the consent of the state where the foreign worker will reside before the visa can be issued. This may seem like a radical ( and possibly unconstitutional ) solution to a problem which we should be able to resolve by the normal process of "checks and balances, but our political system in Washington is so corrupted by lobbyists and money that de-federalization may be the best answer.

Five years ago, I considered myself politically apathetic, but after seeing several generations of young American engineers and technicians working in resturants and grocery stores, it has become clear to me that something has got to be done and it has got to be done soon.

Despite Robert Reich's encouraging words on the subject and as much as I respect him personally, he is a Washington insider and as Secretary of Labor was a major architect of foreign worker programs that plague us today. To turn words into action, I think we will need to organize and actively pursue a campaign to limit the "job destruction" powers of the federal government in order to get our young people working again.

How can we Americans compete with child, slave, and prison labor? Get real! Our country would not be middle class but poverty and full of unrest.

What happened to bring them up to our standard of life? Not enough profit for the few elite?

Nope globalization is lie which has ruined our great country for the few. Many generations are stuck with debt and wars.

"Secondly being a resource manager myself, I believe the argument that H1Bs are cheaper resources is completely hogwash ..."

That's not what H1B managers tell me. A manager of a 20-30 man H1B shop said, "I have a need and an empty desk, I fill out a form and two weeks later someone is filling the desk". That's all he has to do.

And, it's usually under $30/hr, final cost !

Being a resource manager, you must know that any associated costs such as visa processing fees etc. are usually paid by the H1B employment agency, so they do not increase the per-hour cost of the H1B worker to the American employer. In other words, they don't need to be added into the overall cost again.

As for dealing with those pesky "multiple contractors percentages", I suggest you read "Complete Idiot's Guide to Winning Through Negotiation".

Although I am retired, I know the feeling that companies are willing to hire the lowest cost labor irrespective of the effect on trained American students. It does not surprise me that talented American students choose wall street and financial engineering over working in industry. At least on wall street there are real rewards for performance. To those academics that are in favor of attracting unlimited amounts of foreign students, I would suggest to American students that they get their degrees in India. The costs are much lower, probably no need for student loans etc and they seem to be as valued by industry as degrees from American universities. If that means that American universities go bankrupt, so be it. They made their bed and should lie in it.

US citizen who has a Ph.D. in physics. In my 20 years of experience I have found that many companies that employ people with a higher education prefer to hire H1B recipients as opposed to US citizens. This includes the computer industry, higher education, the medical & healthcare industry, oil & gas, electronics, banking and the defense industry.

In addition I find that H1B recipients who achieve sponsorship with hiring power, and later citizenship, will hire new H1B employees.

This is one of the most sensible columns I've heard Mr. Reich give in a long time. But he overlooks two points: First: If, as is or at least was the case in many unionized industries without foreign competition, workers are being paid more than their work is worth, taking a pay cut rather than a layoff is not necessarily "trading one problem for another," but could be trading the problem for the solution. Second: the idea that government spending, whether stimulus, a new WPA, or anything else, will help just doesn't fit with what we know from the last several times we've tried it. Tax cuts are a much better idea, provided they're made permanent and accompanied by at least as much in the way of permanent spending cuts that don't get repealed later.

Let me see, when I joined I.T. in 1992, 95%+ of engineers where I worked were U.S. citizens and permanent residences. Today, 50%+ of engineers where I work are H-1-B (mostly from Indian) and another 35+% are contractors of Indian outsourcing companies. So basically more than 85%+. Out of the engineers that I knew from the old days, let say 10, 4 of them are currently unemployed. Another 3 have left the engineering profession altogether even though they graduated from some of America's finest universities (Berkeley, Stanford, MIT). This is the state of America today. The H1B program is a national disgrace. It has completely destroyed the American middle class and ruin countless lives. It's all about cheap labor and corporate greed. Not only that, the U.S. is giving away its competitiveness in high technology. By employing the H1B people, American companies are training their competitors which will lead to their demise. Not only that, the H1B program is a way for U.S.'s competitors to gain access to high technologies (I am sure China loves the H1B program because it enables them to send spies into American companies to steal technologies -- read the recent articles on the San Jose Mercury News about Chinese high tech spying). The H1B program also discourages a new generation of American students from pursuing a STEM career because they know that there won't be a future for them.

Nick, my numbers ARE correct

Let me rebut your points

1. They cherry picked them retroactively in the first year it was implemented, freeing up more bachelors degree h-1bs

you say “This limit has never been reached, ever”

false – from http://www.gofindlaw.com/News.aspx
USCIS updates H-1B count
As of October 25, 2009, approximately 52,800 H-1B cap-subject petitions and approximately 20,000 petitions qualifying for the advanced degree cap exemption had been filed. Any H1-B petitions filed on behalf of an alien with an advanced degree will now count toward the general H1-B cap of 65,000.

2. & 3 From this law firm website “The USCIS issued guidance in a memo on June 6, 2006 regarding H1B petitions that are eligible for exemptions from the H1B numerical limits (H1B cap). Given the problems that many employers and individuals are facing because of the H1B cap having been met, this guidance is important for eligible cases. The matter addressed in the guidance is the meaning of the exemption for cases based upon an "offer of employment 'at' an institution of higher education, a related or affiliated nonprofit entity, a nonprofit research organization, or a governmental research organization."” http://www.murthy.com/news/n_capexe.html

4. L1 – 7 out of the top 10 users of L-1 visas are Indian outsourcers http://en.wikipedia.org/wiki/L-1_visa What a coincidence.

5. The TN-status is relevant, because it can be used interchangeably by Canadian and Mexican nationals with the H-1b. It does not raise the H-1b cap, but it makes more available to China and India.

I had tactfully stated that you (unknowingly?) grossly misrepresented the true tech foreign worker visa level. I revoke the word “unknowingly?”, as there really isn’t any question in my mind now.

As far as your unprovoked ad-hominem towards me, I was not “cursing” anyone, I’m merely suggesting a policy issue to Professor Reich. As far as thinking logically, that’s necessary to rebut your complex misleading statements. As far as our “incompetence”, I noticed you completely ignored the Cohen & Grigsby youtube video, where US citizen applicants considered ‘very qualified’ are discarded wholesale via false job interviews. As far as lowered salaries goes, I don’t see where this lowers YOUR salary.

Professor Reich, if you are reading this, how do you think it feels for a citizen to endure these withering, endless false accusations on your livelihood by people who have an interest other than the citizens of this nation? I don’t feel Washington watches out for me, I feel I have to watch out for it. There has been an interesting phenomenon in the last 8 years in the republican party. Many members, rather than trying to defend Bush, were fed up with his lack of stewardship of our nation, and abandoned him AND the republican party. I firmly believe that President Obama and the Democratic Party may face the same proposition in their membership, depending on the stewardship of our nation going forward.

And to Vince, I never said anything about being ok to replace Americans. It is essential to change the system to accept the best and the brightest, but that is an argument which I rarely hear, mostly its "out with all of them". Secondly being a resource manager myself, I believe the argument that H1Bs are cheaper resources is completely hogwash. The salaries they get are lower, true, but the cost which finally the employers acrue because of multiple contractors percentages and fees, visa fees, expenses etc make them at least as expensive as Americans, any resource manager will tell you that. And finally I believe, that even if they are drives salaries lower, maybe its good for us. Because we are in a globalized world and if we dont allow the salaries to come down, which they should, then they will just be outsourced to a cheaper destination. And I have seen this happen in organizations where whole departments have been outsourced to low cos destinations like India, China and Mexico, taking even the high end jobs in those departments which didnt really need to be outsourced. Our future is in our hands or lets say mouths

Tom,
Unfortunately your numbers are incorrect. Let me explain why;
1. You cannot cherry pick Master degrees because that is not a choice for employers. The 20,000 visas are only valid for Masters degrees from US universities (that too only within the last 2 years and in limited subject areas), ie for people who got a higher education in extremely high end sciences and recently. This limit has never been reached, ever.
2. There is no such thing as unlimited H1Bs for people doing research etc. As I just mentioned, the 20,000 number is meant for this category.
3. By the very definition, H1Bs cannot work for non-profits, voluntary jobs etc
4. L1s are temporary intercompany transfers, a person doing a job in another country, moving to the US for a short period of time for the same company. These folks have absolutely no rights, most of them dont even get a salary, only expenses. We cannot pass a law to stop them for the simple reason, that if we do so, we cannot do business in any country of the world.
5. Irrespective of what was done to the TN visa, the limit for H1B remains at 65k.
and here are some more facts in case you didn't know
Though the limit is 65k it has only been reached in 3 years. moreover the applications are not received once the cap is reached and the average rate of h1b granted is 1/3 which means a far lesser number of visas are actually granted.
Most of these guys are on their way out now, as their terms are coming to an end and the US government isnt renewing only a fraction of them.
So using them as a scapegoat for our state of economy wont work in another 2-3 years, when mostly would have left.
I wont be able to change your opinion if you are blind to facts and willing to think logically. I just hope that it isn't too late by the time we realize that we were cursing them all this time for no reason other than our own incompetence, by which time we would have lost all of them and our economy would be completely doomed beyond repair

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